The Limited Liability Company (LLC) is a relatively new form of business entity (originally created in Wyoming in the 1970’s) that is now recognized in all 50 States and D. C.Many business professionals believe LLCs present a superior alternative to corporations and partnerships because LLCs combine many of the advantages of both. With an LLC, the owners can have the corporate liability protection for their personal assets from business debt as well as the tax advantages of partnerships or S Corporations. It is similar to an S Corporation without the IRS' restrictions.

Advantages of US LLC

1. Pass-through taxation. LLCs typically do not pay taxes at the business level. Any business income or loss is "passed-through" to owners and reported on their personal income tax returns. Any tax due is paid at the individual level.

2. Protected assets. LLCs provide limited liability protection to their owners (members), who are typically not personally responsible for the business debts and liabilities of the LLC. Creditors cannot pursue the personal assets (house, savings accounts, etc.) of the owners to pay business debts. Conversely, in a sole proprietorship or general partnership, owners and the business are legally considered the same—leaving personal assets vulnerable.

3. Add credibility. The addition of the "LLC" ending on a business name communicates permanence and credibility; it also indicates that the company is officially registered at the State level whereas a sole-proprietorship or partnership is usually only registered at the city or county level.

4. Limited compliance requirements. LLCs face fewer state-imposed annual requirements and ongoing formalities than S corporations and C corporations.

5. LLCs do not have the ownership restrictions. No restriction of nationality making them ideal business structures for foreign investors.

6. Great flexibility in management and organization of the business. LLCs are free to establish any organizational structure agreed upon by the company owners. LLCs can be managed by the owners (members) or by managers, unlike corporations which have a board of directors who oversee the major business decisions of the company and officers who manage the day-to-day affairs.

7. Protect their 1-Person company. Many 1-person businesses will be pleased to know that all 50 States now recognize the 1-Person LLC. This is beneficial because a 1-Person LLC is taxed the same as a sole-proprietorship but still retains the liability protection and permanence of a separate entity along with the benefits we’ve listed above. The 1-Person LLC is a great alternative to the sole-proprietorship and can also grow to add additional members in the future.

8. Build Business Credit. An LLC, being a separate entity, can establish a new and separate credit profile that is distinct from your personal credit profile. This means that although you may have poor personal credit, you can structure your new business in a manner that allows you to build a pristine credit profile for your company, allowing you to receive loans, credit cards, lines of credit, etc. that you would not be able to obtain as an individual (and often at better interest rates).

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